* The Business of Software

A former community discussing the business of software, from the smallest shareware operation to Microsoft. A part of Joel on Software.

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Moderators:

Andy Brice
Successful Software

Doug Nebeker ("Doug")

Jonathan Matthews
Creator of DeepTrawl, CloudTrawl, and LeapDoc

Nicholas Hebb
BreezeTree Software

Bob Walsh
host, Startup Success Podcast author of The Web Startup Success Guide and Micro-ISV: From Vision To Reality

Patrick McKenzie
Bingo Card Creator

Forget about SaaS, meet SabS

Service aided by Software.  Forget subscriptions and licensing models, make money by selling a service delivered through software.  It's what Lokad Forecasting does, they don't sell forecasting software, they use their own software to take your dirty data and give you back clean, freshly pressed forecasts.  Patrick McKenzie thinks he is selling software to print Bingo cards, what he is actually selling is a service that provides words already printed on a Bingo card.  The teachers and party organizers who use his service don't want to buy software, they want to buy his word lists printed out on a 5 x 5 paper grid.  I highly doubt people buy PerfectTablePlanner because it works equally well on Macs and Windows PCs, they buy it because it does a better job of finding chairs for friends and enemies than a floorplan covered in Post-It notes.

Now if you had to manually type out 25 randomly selected words on a piece of paper, nobody would pay enough to make it worth your while.  You might get clients with deep enough pockets to pay for manually prepared sales forecasts, but each employee can only produce so much work in a day.  So the solution is to automate, let your custom software do the work of dozens, maybe even hundreds of employees.  Your customers don't want to select words themselves, or figure out how to use Monte Carlo simulations, they want to buy results that are better than what they can do themselves.

It's a different business model than the Next Big Thing Lottery, but your odds of success are much better.  If you can fully extend your competencies through software you might make more money too.
Howard Ness Send private email
Tuesday, May 14, 2013
 
 
You cannot trademark SabS, it sounds too much like Saab!

But the point is valid. The real success came to Patrick, if I remember right, when he built his "snowflakes" strategy, i.e. pre-built word lists for as many search keywords as possible.
Vladimir Dyuzhev Send private email
Tuesday, May 14, 2013
 
 
Howard, very nice analysis.

I had never thought of it from this angle, but yes, SabS is exactly what Lokad does. Inventory optimization is a mix manual decisions and automated decisions. We try to automate as much as we can, and we charge for human attention when it's just not worth the effort to develop a full robotization.
Joannes Vermorel - Lokad Sales Forecasting Send private email
Wednesday, May 15, 2013
 
 
Yes, this is one of the most fundamental insights into commercial software development, or into any software development aimed at "normal" end users: Software is just a means to an end.

Users don't care about your software. They want a solution for their specific problem. This is what we actually develop. We don't simply develop software. We develop automated problem solvers. The better it fits the problem of the users, their domain, their metaphors, their world view, the more successful it will be.

The more we confront them with our domain, our metaphors, our world view, the more obstacles we throw in their way. Why do a lot of file storages based on the classical hierarchical file system look like a mess? Because the users don't want to care about the hierarchy. They don't care about file formats. They even don't care about file names. They want to store their business letter, and then retrieve it later, with as less steps as possible.
Secure Send private email
Wednesday, May 15, 2013
 
 
Howard, isn't SabS less scalable than SaaS?

A person who's goal is to work a few hours a week (me) wouldn't find it compelling to throw in some manpower, even if it means way more money.
Vladimir Dyuzhev Send private email
Wednesday, May 15, 2013
 
 
Be it SAAS or SABS or S**S, the bottomline is everyone wants a solution.

we have been doing very similar to this. Users send their data, we build the initial dashboard, customer likes what they see and want to use it in-house.  First we sell services and later licenses.
nilesh Send private email
Wednesday, May 15, 2013
 
 
" isn't SabS less scalable than SaaS?"
If software could be used by anyone, then yes selling or renting software is more scalable than using software to provide a service.  But the competency of most people who encounter software in their regular lives (which is about 1/2 of the world's population) doesn't extend much past reading instructions and clicking on hyperlinks (and that still applies in developed countries with high literacy rates), regardless of how computer literate they claim to be.

The World Wide Web allows anyone's expertise to be transmitted anywhere (as long as that expertise can be expressed in text or images).  To the extent that you can use software to store, transmit and customize that expertise, you can scale it.  But even in the case of something like welding, I don't need to have a welder on my premises, I just need the fabricated product on my premises, so if software can transmit my requirements adequately to a welder somewhere else, where she can multiply her productivity, her expertise is also scalable.
Howard Ness Send private email
Wednesday, May 15, 2013
 
 
"SabS"?

Shouldn't the B be capitalised?  (Someone else is going to do this.)

Sincerely,

Gene Wirchenko
Gene Wirchenko Send private email
Wednesday, May 15, 2013
 
 
Interesting distinction.

Won't apply to all businesses, but obviously there are niches where this can be profitable.

One advantage is you get to keep your trade secrets. Customer has no code to experiment with or reverse engineer.
Scott Send private email
Wednesday, May 15, 2013
 
 
One of my competitors does offer a 'service':
http://bit.ly/106wmu6

Good luck to him. But I have no interest in doing people's seating plans for them, or in hiring someone else to do it.  Also it is less scalable than selling software.
Andy Brice Send private email
Thursday, May 16, 2013
 
 
So does your competitor use Perfect Table Plan to offer this service? One of the problems I face selling 3D Box Shot Pro is that a number of my customers are now using it to offer box / ebook design services on Fiverr!
Andrew Gibson Send private email
Thursday, May 16, 2013
 
 
>So does your competitor use Perfect Table Plan to offer this service?

No. He has his own software. Because he is the only one using it, I guess he doesn't have to worry too much about documentation or UI.

>One of the problems I face selling 3D Box Shot Pro is that a number of my customers are now using it to offer box / ebook design services on Fiverr!

Some of my customers are are using my software to produce charts for others. That's fine - realistically only a small percentage of people who need a seating chart with buy software to do it and I still made a sale.
Andy Brice Send private email
Thursday, May 16, 2013
 
 
Andy, do most of your customers buy your software to plan seating for their own wedding and never use it again?  Most of your customers are probably like Photoshop customers who create, doctor or otherwise manipulate image bitmaps for other people.  The event planners who buy Perfect Table Plan add other services to the results they get from using your program before their service package is presented to the final consumer. 

If your customers do use your program for themselves, then they are like someone who acts as their own general contractor for building their own house.  Either way, your customers buy your program because that is the only way to get the service of having theoretical math applied to a real world problem, and your service is only one part of a bigger project.

From a business standpoint, is delivering a standalone computer program the best way to deliver that service?  Maybe it is, but what if I need to plan how trailers are loaded for more efficient logistics and Perfect Table Planner could be modified to solve my problem?  I don't understand how your program works as well as you do, and you don't understand logistics as well as I do.  So I'll never buy logistics software from you, but I might pay you to apply your algorithms to my problems (and figure out the other stuff by myself, or hire other specialists).

 There must be a limit to how much automation can be applied to seating plans, and a limit to how many people will buy software to do it, and those limits are well below the number of people who have to plan events where people sit down.  There is also a limit to how much you can leverage your expertise by selling software to solve one specific problem.

There is also a limit to the number of computer programs that can be sold profitably.  If software can't be developed to make money, then eventually software won't be developed.  There is also a limit to the number of companies that can use software to sell billboard ads or hardware, and I don't think there is anyone on this forum with the resources to compete in either of those niches.  So that leaves selling a service (aided by software, because you are software developers).
Howard Ness Send private email
Thursday, May 16, 2013
 
 
" isn't SabS less scalable than SaaS?"

I think the OP said it here:
"It's a different business model than the Next Big Thing Lottery, but your odds of success are much better. "

What if the golden age of NBTL is over? This is a way to stay in the game if you are not very good at NBTL.
codingreal Send private email
Friday, May 17, 2013
 
 

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